Seasonal Adjustments Can’t Smooth Out Everything

Thursday’s jobless claims were distorted by so-called seasonal factors–technical adjustments to data that account for events that follow a regular pattern, such as layoffs around school holidays or a surge in retail hiring ahead of Christmas.

Almost all major economic indicators are reported with seasonal adjustments, which can help eliminate the impact of, for example, the normal cycle of a winter slowdown in the construction industry. The idea is to make it easier to discern broad economic trends.

But those factors, based on historical patterns, are set months in advance, so they don’t take into account one-off quirks in data. That means that week-to-week or month-to-month economic reports all have to be weighed against possible outside influences–everything from an out-of-the ordinary spring break schedule in one state to a hurricane hitting the coast to the auto industry canceling its usual summer layoffs in light of strong demand.